Decision research is an area of pivotal importance for economic scientists. Every decision harbors risks, eats into resources, and gives rise to uncertainty. How do people take decisions under these circumstances? Many decision-making models are based on the assumption of an almost perfect laboratory environment in which decision-making behavior is strictly rational, with unlimited time and information at the decision-maker’s disposal.
Things tend to be different in practice. Deviations from this economic model (homo oeconomicus) are known as bounded reality. In bounded reality, decisions are only taken rationally up to a certain point and are often taken for emotional reasons. The decision-maker does not take into account all the available information and therefore acts heuristically, i.e. intuitively based on experience.
For more information about the Summer Institute click here.